NZD/USD consolidates around 0.6350 amid latest trade/RBNZ news

  • NZD/USD bears catch a breath after three consecutive days of declines.
  • The US-China trade deal optimism got an additional boost from the USTR.
  • RBNZ iterated its support for August rate cut, dimming prospects of November action.

Increasing odds of a successful trade deal between the United States (US) and China seem recently challenged the NZD/USD pair sellers. With this, the quote stops from the three days of a consecutive downpour while trading around 0.6350 at the start of Tuesday’s Asian session.

The pair’s bounce from an eight-day low could be attributed to the latest announcement from the United States’ Trade Representative’s (USTR) office. The notification said that the US is to consider certain tariff exclusions on $34 billion of Chinese imports from November 01. The said relaxation will last for twelve months and will include items that were granted last December and are set to expire on December 28, 2019.

This adds to the trade positive sentiment that was earlier buoyed by the comments of the US President Donald Trump that the US and China are “ahead of the schedule” as far as the preparations for the trade deal is concerned. During the weekend, both the global superpowers, namely the US and China, announced that central issues of the “Phase One” deal are almost done, which in turn offered risk-on during the week-start trading session.

It should also be noted that the Reserve Bank of New Zealand (RBNZ) recently crossed wires while supporting its 0.50% rate cut in the month of August. The Assistant Governor and General Manager of Economics, Financial Markets, and Banking, Christian Hawkesby recently said that the August rate cut should support a lift in inflation expectations and an eventual lift in actual inflation. The policymaker was speaking from the Annual Commonwealth Bank Global Markets Conference, in Sydney.

With the recent trade optimism joining the RBNZ policymaker’s statements against the widely anticipated rate cut in November, the Kiwi holds on to catch a breath after multiple days of declines.

Traders will now look forward to more news/headlines for fresh direction as the economic calendar remains light ahead of US session where housing and consumer confidence data will entertain momentum traders.

Technical Analysis

Having bounced off 21-day Exponential Moving Average (EMA), NZD/USD could revisit a 50-day EMA level of 0.6370, a break of which will further escalate the recovery towards 0.6441/52 region comprising 100-day EMA and September month high. Alternatively, pair’s declines below 0.6347, comprising 21-day EMA, could recall 0.6300 on the chart.

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